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The Incredibly Contradicting Trends of PC Sales

Speculation is mounting that Hewlett-Packard will make a summer comeback and retake the crown as the world’s top PC manufacturer from rival Lenovo. Apparently, HP is scoring some major government contracts around the world that will bolster sales as much as 15 to 20 percent, while Lenovo’s forecast is for a quarterly shipment decline of as much as 12 percent.

Those crisscrossing trend lines should tell you everything and nothing about what you need to know about PC sales. For the past year, HP and Lenovo have been taking turns at the top spot of PC mountain, edging one another out of the number one market share slot by factions of a percent. All the while, overall PC sales continue to fall. In 2012, PC sales dropped nearly 9 percent. The 2013 forecast calls for further decline up to 11 percent.

The demise of the PC is evident in the struggling performance of many vendors. Microsoft and Intel are adjusting strategies as Windows 8 failed to ignite a general surge in new PC sales. The shift away from PCs to tablets and smartphones is palpable, as seen in Apple becoming the most valuable company in the U.S. and one of the richest in the world. Dell, which accounts for 50 percent of its revenue from PC sales, is laboring to go private to accelerate its enterprise transformation. And software companies across the board are pushing cloud applications to offset declines in traditional licenses that would have ordinarily gone on new PCs.

It all sounds pretty ominous except for one thing: Solution providers don’t see it. In fact, solution providers tell Channelnomics that they’re seeing increasing demand for and sales of lowly PCs. They say PC sales are brisk as business invest in new machines and replace aging legacy units.

Why the difference? A few things are happening beneath the surface.

Windows 8 may not have been a catalyst for PC sales, particularly in businesses. However, Microsoft’s forthcoming discontinuation of Windows XP is likely driving some PC refresh activity. Businesses loved Windows XP – it was stable, secure and had plenty of applications and drivers. Best of all, they’ve had a decade to fine tune around Windows XP. Few want to get caught without support when it dries up next spring.

The shift to tablets and smartphones is mostly a consumer phenomenon. Business users like tablets, too, but they use them for information consumption, not generation. Conventional notebook PCs remain more practical for business users who must deal with copious amounts of information.

PCs are low margin, but their attached sales are not. Solution providers can make money selling PCs at or near costs because they’re using selling support and managed services contracts alongside. Additionally, solution providers sell complementary products, such as peripherals and software that enhance the value and margins associated with the PC sale.

PCs don’t always start a conversation; they’re sometimes dragged into a deal. When a business is buying storage, networking, security or other infrastructure, solution providers have the opportunity to talk about PCs. And that sometimes leads to a new sale or sales enhancement.

Of course, solution providers saying they’re seeing an increase in PC sales are relative. It’s much easier for a local or regional solution provider to mark an increase in PC sales than it is for a vendor that is dealing in millions of unit shipments per quarter. And whatever blip is being recorded by solution providers isn’t enough to offset the decline in consumer sales that is hitting the books of HP, Lenovo, Dell and Microsoft.